5 Basic Principles of Economics

Thinking Like an Economist

Tag: Equilibrium Compatibility

  • Understanding a Market Equilibrium: Challenges for Restaurants

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    Something seems to be happening in the US restaurant market. Lots of well-known chains are closing “under-performing” locations while others are asking for bankruptcy protection. [1] [2] [3] Even in Canada, some news items talk about restaurants offering discounts to “bring customers back” because “eating out is expensive”. This post notes that change is common…

  • Predicting an Election (Stock Market)

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    On Tuesday night, two US politicians will talk and then some media experts will talk about what the politicians talked about. Polls suggest that the country is nearly split 50/50 about which politician is preferred. For media companies, that is great news: they can say “Stay tuned for the latest news on this small but…

  • Swiftonomics: Economic Ideas and Taylor Swift

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    Taylor Swift is accused of causing inflation. She also represents an innovative organization worth more than US$1,000,000,000. Beyond this high-level perspective on her impact, many teachers are using her career to demonstrate old economic ideas more memorably. Some instructors offer entire courses in university [1] [2] [3] [4] [5] and at the high school level.…

  • Fast Food and Downward-Sloping Demand Curves

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    A pair of recent news articles concerning popular fast-food restaurants noted differences for different brands. First, McDonald’s restaurants are changing tactics because consumers (in the US especially) are feeling stressed by the economy. Second, even if the Canadian economy is also performing poorly, Restaurant Brands International Inc. (RBI, which oversees Tim Hortons, Burger King and…

  • The Equilibrium Principle

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    The only relevant behaviours by members of a group of participants are those which are compatible with one another. Behaviours that are not compatible with the behaviours of others (e.g., with competitors and with the other side of the market) are not sustainable, regardless of the intentions of any one individual. Most people are familiar…

  • The Gains from Trade Principle

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    Most economic activities involving more than one person are not “zero-sum games”. They involve trading of some kind. Production without consumption is a waste and consumption without production is impossible. This perspective is not isolated to economics. Marketers encourage firms to adopt a “marketing orientation”, in which a firm seeks a profitable strategy which creates…